Replies to post #15457 on Epoxy Inc. (fka EPXY)

[KnowProphet]

soooooo speaking of groupon, who we don't have any chance to compete with.... (snicker snicker) I decided to look at them just a little, and grace the board with a taste of my prophetic DD ability. so Here's all I need to know about Goliath....

Hmmm.. It seems Goliath has a chink in his armor! Not really the immovable object that has the market cornered that some would like you to think. It seems as though they can't retain customers, and that they aren't real good for small businesses. "Groupon costs them money"

It would seem to me that our app is more beneficial to the customer (the business). One big difference between the business models, Groupon is a 1 time shot coupon- boom consumer gets a deal, and then never does business with groupon's customer again. So lets sum up, the consumer wins, groupon wins, business owner loses. No wonder they rarely re-up for a second promo. With a punch card type app. the consumer returns multiple times- what 5 or 10 at least, can't wait to get their next punch card started..... consumer wins, business wins, NHYT wins hence WE WIN!

What You Need To Learn From Groupon's Unprofitable Business Model

A little more than two years ago, Groupon was the apple of the startup community’s eye. It had turned down a $6 billion acquisition offer from Google and was headed for a remarkable IPO. Today, no one really knows what Groupon’s future holds. But it doesn’t look good.

Since its IPO in November of 2011 (the largest by a U.S. Internet company since Google raised $1.7 billion in 2004), the company’s stock has plummeted. After debuting at $20, Groupon’s stock can now be had for less than $6 a share. Adding insult to injury, Groupon’s market cap is now almost $2.5 billion less than Google’s original offer.

Now, to be fair, Groupon’s current stock price of around $5.38 is more than double what it was in November when it hit rock bottom. But I’m guessing that nice gain doesn’t quite make up for the billions that investors have watched fly out the window in the last year.

Where Did Groupon Go So Wrong?

When it comes to entrepreneur leadership lessons (which is the theme of this series of posts), the company’s management team — including its much-maligned former CEO, Andrew Mason — forgot that building a sustainable business is a marathon, not a sprint.

Ultimately, that led to a series of bad decisions, many of which Fast Company’s Noah Fleming does a great job of highlighting in a post from last October. But the business’s most damning mistake was its disproportionate focus on new customer acquisition, often at the expense of customer retention.

Groupon was obsessed with growing as fast and as big as it possibly could, which resulted in high churn and, as Slate’s Farhad Manjoo points out, a business model that is just about anything but profitable.

Yes, new customer acquisition is critical to taking a business from the startup phase and growing it into a big, publicly traded corporation. But that big corporation you become will simply be a house of cards if you’ve failed to pair short-term growth initiatives with long-term strategic vision.

Oh, and you certainly can’t mistreat, abuse, or ignore your existing customers to the point that very few of them hang around beyond their first use with your product or service. Doing that simply leads (in a best case scenario) to treading water.

Why You Should Care About Groupon’s Demise

Groupon isn’t the only technology company that’s experienced incredible short-term success, only to flame out as it scales. The number of companies on that list is far too long to share here.

But here is the lesson that entrepreneurs and CEOs can learn from Groupon: Resist the temptation to chase short-term success at the expense of long-term sustainability.

I recognize that in the startup and expansion-stage world, it almost always seems like there are new monthly quotas to hit or quarterly objectives to achieve. But at the end of those months or quarters, where does short-term success get you? Ultimately, there is always going to be another month, quarter, or year. And if you haven’t spent any time focusing on your long-term health while you’ve executed short-term growth initiatives, you will eventually run face first into a brick wall.

Just ask Groupon, Andrew Mason, and anyone that’s invested in the daily deals business.

This post is part of a series in which I am sharing the business philosophies and entrepreneur leadership lessons I’ve learned from my 25-year career in software. Below is a short preview of the final topic to come, and you can click here to go to the top of the page and the table of contents to review the topics I’ve covered previously. I hope you’ll find these helpful to your own business experiences, and that you’ll come back often to follow along and share your own comments and stories.

and then I found this-

It would appear that NHYT is in the right place at the right time in the right market......

Investors are clearly happy after Groupon's (GRPN) stock jumped nearly 13% after the board fired CEO Andrew Mason. Mason has been under pressure due to poor earnings and a falling stock price. Since its IPO, Groupon's stock is down more than 82%. Not quite the return shareholders were expecting.

So with Mason out, the market seems to believe Groupon has a fighting chance given the sharp rise up after the announcement. However, I honestly don't believe his firing changes anything. Groupon's business model is the problem, not Mason.

Groupon fails because the small businesses offering the discounts end up losing money. Not only will a business have to offer a steep discount for a product or service, but will also have to pay a high commission structure to Groupon, just for listing the deal.

The theory behind small businesses doing this is even though they would lose money on the coupons, they believe they can attract long-term customers. Unfortunately, this theory is wrong. The businesses find customer volume falls off after the deals are done and they are not much better off than before they offered the coupon.

Business owners have no incentive to list deals through Groupon. In fact, it would end up hurting the business by doing so. So why would a business owner renew a deal on Groupon?

The company's problem is not related to who is CEO, but is about the business model. In fact, the next CEO will run into the same issues that Mason had. Unless the new CEO can change the entire business model, it's very unlikely much can be done to turn the company around.

Even with Mason gone, investors should just stay away. This is a company which should have never gone public to begin with. Eventually the volume of coupons will drastically fall and no matter how big Groupon's sales force is, it won't be able to stop the bleeding when the coupon issuers do not benefit. Groupon's best option is to adapt to a stronger business model and not just focus on management change.

so lets put to bed the argument, comparison, or whatever the dog wants to call it. Groupon isn't a threat, won't be a threat, can't be a threat- maybe they will buy NHYT and get a clue in the business model dept.- or maybe Google buys NHYT to thumb their spiteful noses at groupon..... who cares.

trade the price action.